New Delhi, July 31 (IANS) Cotton textile exporters on Tuesday urged the Goods and Services Tax (GST) Council to allow accumulated “Input Tax Credit” (ITC) on fabrics available with weavers as on July 31 for adjusting GST payment on outward supplies – both domestic and export.
Although the GST Council, on July 26, recommended to allow refund of unutilised ITC to taxpayers in the textiles sector, the notification had, however, also stated that the accumulated credit lying unutilised as on July 31, 2018 will lapse.
“This will lead to serious problems for the textiles sector as the costs will go up on the available stocks as on July 31, 2018,” Cotton Textiles Export Promotion Council (TEXPROCIL) Chairman Ujwal Lahoti said in a statement.
According to Lahoti most of the dyes and chemicals, packing materials, fibre and yarn used by the textiles sector attract 12 per cent to 18 per cent GST, whereas the rate on fabrics is only 5 per cent leading to accumulated ITC on account of inverted duty structure.
The “Section 54” of the CGST Act allows “refund of unutilized Input Tax Credit shall be allowed where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies,” the statement said.
While the government’s intention is to bring down the cost of products by providing the refund of accumulated ITC, it appears the government took the decision to make accumulated credits till July 31 null and void due to some technical reasons, Lahoti said.
“Fabric manufacturers have paid the GST on all their inward supplies – both goods and services and have legitimately taken the Input Tax Credit and, therefore, these Input Tax Credits should not be denied on fabrics by making them null and void,” he added.